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IRS audit revenue plunged following mass layoffs, watchdog finds

IRS audit revenue plunged following mass layoffs, watchdog finds

Summary

IRS audit revenue dropped by 35% in fiscal year 2025 after the agency lost nearly 10,000 audit and collection employees. The IRS collected $6.5 billion from audits in 2025, down from $10 billion the previous year, even though total tax revenue rose slightly.

Key Facts

  • IRS audit revenue fell from $10 billion in 2024 to $6.5 billion in 2025, a 35% decrease.
  • The IRS audit and collection workforce dropped to 17,517 employees by January 2026, nearly 10,000 fewer than in 2024.
  • The decline in staff is linked to layoffs and resignations driven by cost-cutting efforts under the Trump administration’s Department of Government Efficiency (DOGE).
  • Large corporate audits increased by 17%, but audits of new business partnerships dropped by 30%.
  • Audits of individuals earning over $400,000 declined by 26% in 2025.
  • The IRS Global High Wealth program lost 27% of its employees after 2025 workforce cuts.
  • Despite fewer audits, total federal tax revenue reached $5.3 trillion in fiscal 2025, a 4.2% increase from the previous year.
  • Funding and staffing cuts to the IRS risk reducing tax enforcement, which experts say raises more money than the cost of the IRS itself.
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